Refer to the given information. If the price of this bond increases to $1,250, the interest rate will:

Answer the question on the basis of the following information for a bond having no expiration
date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest
rate = 10 percent.

A.  fall to 9 percent.
B.  fall to 8 percent.
C.  rise to 11 percent.
D.  rise to 12 percent.


B.  fall to 8 percent.